Ask a sales rep for the No. 1 objection they face with prospects and more often than not, they’ll say that it’s price. Given the state of our economy over the last several years, price can certainly be a legitimate concern. Often, however, a price objection is merely habit – the tendency of the buyer to attempt to negotiate before making any purchase. Or it may actually be another objection, one that’s more personal or revealing, in disguise. For example, a prospect might cite financial concerns to mask the fact that they have to consult with the real decision maker, which they failed to share with you upfront.
Before tackling an objection, you must first understand its true source, which is done by probing further. Consider saying, “Tell me more about your cost concern,” and continue to ask follow-up questions until you have discovered the real heart of that objection. You may hear that it’s actually less of a cash flow issue and more a concern about return on investment – an objection you may overcome by sharing case studies of success generated for past clients.
Keep in mind that a price question being posed doesn’t necessarily mean a prospect is unwilling to pay full price, as long as you demonstrate strong value. With that said, there are times when it may make good sense to discount. Be sure your sales team is trained on when it is appropriate to discount.
You should always have a justifiable reason to discount, other than simply that the prospect has asked for it, or you risk damaging the integrity of your brand. Depending upon your business model, those justifiable reasons might include: when customers purchase in volume, when they pay quickly, when they have referred several new customers, or if the likelihood for future business is high as a result of entering a new market or capturing a marquee client.
The bottom line is to set boundaries around discounting for your team, and make it your practice never to discount unless you can justify it to the prospect to prevent loss of credibility. It’s best not to make immediate concessions when asked, as your prospect may believe you have additional room to move. Instead, slow down the negotiation process and explain that you’ll get back to them.
For most businesses, discounting doesn’t make sense if it’s in an effort to simply match a competitor price, stimulate sales, or just because a prospect asks.
Lori Turner-Wilson is an award-winning columnist and CEO/founder of RedRover Sales & Marketing, www.redrovercompany.com. You can follow RedRover on Twitter (@redrovercompany and @loriturner) and Facebook (facebook.com/redrovercompany).